In June of 2016, alimony reform advocates in Massachusetts were riding
high. Their bill, aimed at closing a loophole in the state’s alimony
law that allowed so-called
“lifetime alimony” to continue for some Massachusetts spouses, had just passed the Massachusetts House in a
unanimous 156-0 vote. Support in the Senate seemed solid, and the bill was supposed to
breeze into law. Then came the July legislative crunch, and before reform advocates could
blink, the reform bill had been
passed over by a state senate that was more interested in other issues.

And then it happened again. Just like the year before, the 2017 legislative
session ended with alimony reform mired in the state senate. This time,
the culprit was Sen. William Brownsberger (D), powerful chairman of the
Joint Committee on the Judiciary,
standing in the way of passage.

Could Elimination of Alimony Tax Deduction Spur Massachusetts Reform?

On its face, the language of
Section 11051 suggests that divorcing spouses will have all of 2018 to enter divorce
agreements that include tax deductible alimony. Indeed, it appears that
all divorce and separation agreements entered before December 31, 2018 may
include tax deductible alimony, and that alimony will continue to be tax
deductible into the future for pre-2019 divorces. In essence, tax deductible
alimony is “grandfathered in” for all Americans divorced before 2019. Individuals divorced in
2019 or later will be out of luck.

As noted in our blog on the tax bill, the
alimony formula presently used under the Massachusetts alimony statute was premised on
the belief that alimony payments would be tax deductible to payors:

The Massachusetts alimony statute “caps” alimony at
35% of the difference between the respective gross (pretax) incomes of the parties. The ARA,
passed in 2011, based the 35% cap on the
long-standing rule that alimony is tax deductible. Given that many alimony payers earn income
in the highest tax brackets, the deductibility of alimony from the payer’s
gross income often results in substantial tax savings that significantly
“cushions the blow” for payers.

If the alimony deduction is eliminated under the new tax bill, will cause
Massachusetts legislators to take another look at the law? If so, could
this be the opening reform advocates need to close the lifetime alimony loophole?

Because the alimony deduction won’t be eliminated until 2019, it
seems unlikely that the moribund Massachusetts legislature will spring
into action to address the 35% cap anytime soon. Of course, with anti-Trump
sentiment running strong on Beacon Hill, one can’t be sure what
measures Baystate lawmakers could take in response to the Republican tax
bill. At a minimum, the legislature seems likely to soften the blow of
the new tax bill by making alimony tax deductible on Massachusetts state
income taxes at some point in the next two years. To be clear, alimony
is currently deductible for state income tax purposes
only because the alimony deduction exists under federal law. The Massachusetts
state income tax statute,
M.G.L. c. 62, s. (d)(1), defines gross income and the vast majority of its tax deductions by simply
incorporating the federal tax code, word for word, into Massachusetts law.

Obviously, any federal tax deduction is significantly more valuable than
a state tax deduction, given that individuals pay substantially more in
federal taxes than state taxes. Nevertheless, it would be a simple matter
for Massachusetts lawmakers to make alimony tax deductible for Massachusetts
state income tax purposes before the federal change takes affect in 2019.
For alimony reform advocates, the question is whether changes to the ARA
or state tax code could be a legislative vehicle for the changes sought
by reformers.

2018 is a New Year. Will the Result be Different for Alimony Reform?

Due to the fact that the Joint Committee on the Judiciary has been concentrating
on Criminal Law Reform, Alimony Reform has been put on a back burner.
While it is understandable that they have their priorities, H 740 is a
no-brainer.

The Senate Chairman, Senator Will Brownsberger has made it clear that the
Committee will deal with H 740 after the Thanksgiving Holiday. The problem
is that although he has expressed that H 740 does in fact return the ARA
to it’s original intent, he is sympathetic to the arguments brought
forth by the receiving ex-spouses. It is up to YOU to convince him of
the importance of finality and the fact that a Judge can deviate for special
situations.

Hitner also reported that the original Alimony Reform Task Force –
whose recommendations form the backbone of the 2011 Alimony Reform Act
– reconvened this fall to advocate for the new bill:

Rep. Claire Cronin (House Chair of the Judiciary), hosted a meeting back
in September with the Alimony Reform Task Force Members to discuss the
current status of H 740. At the meeting the Task Force Members and Rep
Cronin discussed any possible issues and was educated by the Attorneys
as to how well the ARA of 2011 was working and the need to pass H 740.
Rep Cronin in in support of H 740.

Handicapping Alimony Reform in 2018. Will it Happen?

Persistence often pays off in Massachusetts politics. Rumor has it that
advocates will focus all of their attention on Brownsberger’s committee
in the new year, confident that the House will support a bill if it can
only get past the Senate. In 2017, Brownsberger told supporters that the
Committee’s focus was criminal justice reform. With that
now out of the way, there seems little reason for Brownsberger to further delay a vote on
alimony reform in the face of persistent supporters.

After two years of frustration, it is hardly certain that 2018 will see
a new alimony bill in Massachusetts, but supporters have good reason to
hope that this will finally be their year.

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